688 F.

2d 853
1982-2 Trade Cases 64,941

BRUCE DRUG, INC. and Richard Najarian d/b/a Bruce

Medical
Supply, Plaintiffs, Appellees,
v.
HOLLISTER INCORPORATED, Defendant, Appellant.
No. 81-1745.

United States Court of Appeals,

First Circuit.
Argued Feb. 12, 1982.
Decided Sept. 8, 1982.

Donald B. Gould, with whom Andrew S. Hogeland, Goodwin, Procter &

Hoar, Boston, Mass., Roger J. McFadden and Hubachek & Kelly, Ltd.,
Chicago, Ill., were on brief, for defendant, appellant.
Gerald P. Tishler, with whom Barbara A. Lenk, and Brown, Rudnick,
Freed & Gesmer, Boston, Mass., were on brief, for plaintiffs, appellees.
Before ALDRICH and CAMPBELL, Circuit Judges, TORRUELLA,
District Judge.*
BAILEY ALDRICH, Senior Circuit Judge.

This is an appeal by a manufacturer from a preliminary injunction ordering it to

continue supplying its products to plaintiff dealers. Plaintiffs, Bruce Drug, Inc.
and Richard Najarian, d/b/a Bruce Medical Supply, sue, inter alia, under the
Clayton Act, 15 U.S.C. 26, alleging violation of section 1 of the Sherman
Act, 15 U.S.C. 1, by the termination of their dealerships, and by further
actions resulting in their being boycotted by other dealers from whom they had
been acquiring defendant's products. The matter was submitted on the basis of
exhibits, affidavits and depositions. We reverse, finding unwarranted the court's
finding with respect to the likelihood of plaintiffs' success. In so doing we
recognize that the scope of our review is no broader because the evidence was

written, e.g., Custom Paper Products Co. v. Atlantic Paper Box Co., 1 Cir.,
1972, 469 F.2d 178, 179; nor do we distinguish between the respect due to
ultimate and to subsidiary findings. Pullman-Standard v. Swint, --- U.S. ----,
102 S.Ct. 1781, 72 L.Ed.2d 66 (1982). At the same time, the fact that the
evidence was in writing accentuates the district court's obligation to consider all
of it, and the court's findings can stand only if they are reasonably supported on
the record as a whole. Custom Paper Products Co. v. Atlantic Paper Box Co.,
ante.
2

We have a serious problem with the number of unchallenged records which

have been ignored, and the inconvenient affidavits that plaintiffs would dismiss
as "obviously false," and as indicative of "the frightening degree to which the
dealers were and are intimidated." Certain affidavits have been disregarded not
only without giving reasons, but without apparent grounds. And while plaintiffs
are quick to reject defendant's affidavits, they emphasize the importance of one
given them by a discharged employee (Mayer) of defendant which, in part, is
plainly hearsay, and is contradicted not only by several witnesses, but by
unimpeached records. Our difficulties do not stop there. Both sides give
varying interpretations, or advance different conclusions, about the same event,
depending upon the point at issue. Thus defendant asserts at one stage that a
letter written on January 23 could not have affected its decision to terminate
plaintiffs' dealership because its decision was made January 25, assertedly
before the letter could have arrived, and at another stage says that it was
plaintiffs' conduct that led to the decision to terminate, said conduct having
culminated at a meeting concededly taking place on January 28. Plaintiffs,
correspondingly, combat each of these issues by arguing the obverse, as
occasion demands. Perhaps under these circumstances we should let the chips
lie where they fall, but duty demands a resolution on the record.

Defendant Hollister Incorporated is the nation's leading manufacturer and

supplier of ostomy appliances and related products for ostomates, viz., pouches,
etc., used for the collection of body wastes which drain through a surgically
created opening in the abdomen of individuals whose intestinal or urinary tracts
have been fully or partly removed by surgery. Although prescriptions are not
needed, it is essential that ostomates be properly fitted to avoid physical injury,
and highly desirable that salespersons be tactful and understanding, and have
appropriate training. From defendant's standpoint, this is most important at the
outset, it appearing that customers, once satisfied, have "strong brand loyalty."

Defendant distributes its products domestically through a network of trained,

authorized dealers composed of retail drug stores, pharmacies and other
surgical supply stores now totalling approximately 1,600 in number. Pursuant

to a contract, Abbott Laboratories, Inc. (Abbott International) has the sole right
to distribute Hollister products abroad. Bruce Drug, a retail pharmacy in
Waltham, Massachusetts, became an authorized Hollister dealer in 1971. In
January, 1978, Richard Najarian, president of Bruce Drug, wrote Hollister and,
alluding to previously discussed plans to market Hollister products on a
national basis, requested permission to change its account name to Bruce
Medical Supply. Hollister responded that it had no objections to the change.
Najarian proceeded to set up, under the new name, a national mail order
business in ostomy supplies. For a while Bruce Drug and Bruce Medical Supply
operated under the same corporate structure and from the same location. In
January, 1979, however, Bruce Medical Supply became a separate entity,
operating as a sole proprietorship, and in November, 1979, it moved to a
warehouse at a different location, leaving Bruce Drug as an authorized Hollister
retailer. For future purposes we sometimes refer to the plaintiffs jointly as
Bruce.
5

By this time, through extensive advertising, Bruce Medical Supply had

developed a substantial nationwide mail order business, selling ostomy
products, both wholesale and retail, at discounts. Its Hollister retail prices,
exclusive of shipping and handling charges, were 20% below suggested list. In
addition to obtaining natural economies of scale, Bruce was able to place large
enough orders with Hollister to qualify for standard quantity discounts. Its
business swelled to approximately 10,000 individual customers in the United
States and Canada. The court found that approximately 50% of its revenues
were derived directly from the sale of Hollister ostomy products. Another 17%
of its business came from the sale of non-Hollister, but related, products, most
of which were sold to Hollister products users.

On February 1, 1980, Hollister notified Bruce by letter that it was terminating

its dealership as of March 1. The court found that, rather than for the reasons
given,

"Hollister acted in response to the concerns of other authorized Hollister

retailers over the potential loss of business to Bruce Medical Supply. At least
one American authorized retailer communicated with Hollister in January, 1980
and suggested that Hollister should 'delay' shipments to Bruce Medical Supply
as a way of forcing consumers to purchase from authorized retailers. See
Plaintiffs' Exhibit 7. In addition, Abbott International ('Abbott'), the exclusive
authorized overseas distributor of Hollister ostomy appliances, expressed
concern to Hollister in January, 1980 about the discount pricing by Bruce
Medical Supply that appeared in advertisements in the Ostomy Quarterly, an
international publication for ostomates. See Plaintiffs' Exhibit 16. See also

Plaintiffs' Exhibit 6 (complaint from authorized retailer to Hollister in February,

1979 concerning loss of business to Bruce Medical). The nature of these
communications and their timing are circumstantial evidence supporting my
finding that Hollister acted primarily because of the discount pricing by Bruce
Medical Supply and because of the effect that Bruce Medical Supply was
having on sales by authorized Hollister retailers."1 (Emphasis ours.)
8

Having in mind that there were 1,600 dealers, the amount of affirmative support
for this general conclusion was miniscule. Although the court spoke of "at least
one American authorized retailer ... in January, 1980," there is nothing to
warrant the implication in the phrase "at least." The single retailer was a
pharmacy in Miami. Its complaint was not about "discount pricing," but only
about selling to unauthorized dealers. The previous complainer, a pharmacy in
Tacoma, Washington, did make a telephone call a year before about pricing.
The third complainer, Abbott, complained only because Bruce was publicizing
its discount prices in an area where the court found, properly, see post, that
Abbott had exclusive rights.2 Against this insignificant showing substantial
evidence was furnished by defendant that discount pricing of its products was
generally recognized and accepted. Even plaintiffs' brief acknowledges that
there were other discounters. To this we add that there is no evidence of any
action taken or threatened against them, then, or at any time. Bruce itself, prior
to the present imbroglio, had been discounting most certainly to defendant's
knowledge, as its standard practice, for some two years. While Najarian
testified that defendant's officials expressed objections, the inescapable facts
are that defendant took no action, and did not even discontinue the quantity
discounts that permitted Bruce's procedure. On this record we must find clearly
erroneous the court's finding a substantial likelihood that, in its February
termination, "Hollister acted primarily because of (Bruce's) discount pricing,"
and particularly so its finding that the termination was the result of a conspiracy
or combination, as distinguished from unilateral action by defendant.

Defendant's given reasons were Najarian's refusal to comply with certain credit
requests, and his persistently belligerent attitude. The court found both to be
pretexts. Although a sudden increase in plaintiffs' orders in January, 1980,
might have suggested credit problems, there was evidence from which the court
might find this reason was advanced as a talking point.3 However, the
belligerency was well proven, indeed, even admitted in plaintiffs' brief, with the
inadequate excuse that it was brought on by defendant's poor performance.
Even if defendant's performance had, in fact, been poor, it would probably not
have made Najarian's conduct any more palatable. It is similarly no answer to
the well-documented, and longstanding, disputes between Najarian and
defendant's territorial manager, culminating in written complaints by the latter

to her superiors, for plaintiffs to assert that she was "obnoxious," and primarily
at fault. Finally, plaintiffs scarcely help their case by producing an affidavit
stating that in a pre-termination meeting with Najarian, Winn, defendant's
president, who made the decision to terminate, became so irritated that he got
"red in the neck and face ... and screamed ... to get Najarian out of his office."
On plaintiffs' own evidence, defendant's claim that the termination was partly
the product of a perceived personality problem is not easily dismissed. The
court, however, dismissed it without explanation.4
10

As a further difficulty with the court's conclusion that it was dealer complaints
that caused defendant to terminate Bruce, we note the court's reasons for
rejecting defendant's claim that the injunction would cause a reduction of
services by local dealers, because of their cost, in the face of Bruce competition.
The court found this "unlikely to occur because no individual dealer has been
shown to be losing customers to Bruce Medical Supply in substantial numbers."
This was, seemingly, riding the same horse in two different directions. The
dealers were conspiring, although individually, they were suffering very little.

11

Interestingly enough, the court never names, or even, as we read its opinion,
suggests, who were the conspirators involved in the termination of Bruce's
dealership. Was it the gang of four; defendant and three complainers? While the
court finds that the individual dealers involved therein were the boycott
conspirators, all that it says with respect to the termination was that defendant
"acted in response to the concerns of other authorized retailers over the
potential loss of business to Bruce Medical Supply." This finding, even were it
correct, did not make out a case. The mere existence of a number of complaints
in a supplier's files, especially when a small number, is insufficient, without
more, to sustain the inference that a dealer was terminated because of them, or
because of a conspiracy. H. L. Moore Drug Exchange v. Eli Lilly & Co., 2 Cir.,
1981, 662 F.2d 935, 951; Edward J. Sweeney & Sons, Inc. v. Texaco, Inc., 3
Cir., 1980, 637 F.2d 105, 110-17, cert. denied, 451 U.S. 911, 101 S.Ct. 1981,
68 L.Ed.2d 300.

12
"Even
where a termination follows a receipt of complaints from wholesalers or
agents, there is no basis for inferring the existence of concerted action, absent some
other evidence of a tacit understanding or agreement with them."
13

H. L. Moore Drug Exchange v. Eli Lilly & Co., 662 F.2d ante, at 941.

14

"There are special reasons for applying the precept to a case in which a
manufacturer receives price cutting complaints from competitors of a particular
customer. To permit the inference of a concerted action on the basis of

receiving complaints alone and thus to expose the defendant to treble damage
liability would both inhibit management's exercise of its independent business
judgment and emasculate the terms of the statute."
15

Texaco, Inc., 637 F.2d, ante, at 111 n.2. Plaintiff's solitary authority to the
contrary is Battle v. Lubrizol Corp., 8 Cir., 1982, 673 F.2d 984. With respect,
the majority opinion there purports to recognize the rule and then, without
explanation, reaches the opposite result. The facts, moreover, were quite
different; a small customer being cut off on the complaint of a powerful one. In
any event, we decline to hold this generally recognized rule can be overcome by
complaints from two pharmacies, a year apart, and a foreign dealer not in
competition, whose complaint was limited to advertisements.

16

Finally, an affirmative finding of conspiracy is not to be supported simply by

labelling a given reason pretextual. Eli Lilly & Co., 662 F.2d, ante, at 941; cf.
NLRB v. Eastern Smelting & Refining Corp., 1 Cir., 1979, 598 F.2d 666. As
the court said in Eli Lilly & Co., ibid.,

17
"(T)he
mere fact that a business reason advanced by a defendant for its cut-off by a
customer is undermined does not, by itself, justify the inference that the conduct was
therefore the result of a conspiracy."
18

We have already pointed out that the court's labelling the continued
belligerency of Najarian pretextual was clearly erroneous. With regard to
defendant's credit complaints, as to which the court chose to accept plaintiffs'
rather than defendant's evidence, but see post, we note this further language
from Lilly,

19
"Even
if a manufacturer or supplier, acting independently, gave a false or inaccurate
reason for its action, whether because of a desire to avoid controversy or some other
consideration, this would not violate any legal obligation to the customer, absent
proof of a conspiracy or breach of contract."
20

Put another way, it takes two to tango, and even a truly pretextual reason
advanced by one party is not, without more, evidence binding the other alleged
parties to prove an agreement. No finding of conspiracy was warranted on this
record.

The Boycott, so-called

21

Perhaps realizing the paucity of the evidence supporting its finding of a

concerted termination of Bruce's dealership, the court conceived a nunc pro

tunc approach based upon a subsequent enforced prevention of Bruce's

purchasing defendant's goods from other dealers. After it had been cut off from
direct purchases, Bruce negotiated with other dealers, persuading them to
include in their orders large quantities desired by it. This would usually benefit
the intermediary, as it could thereby increase its total order to obtain quantity
discounts, which it would share with Bruce. The court found,
22

"During the spring of 1981, Hollister took steps to prevent Bruce Medical
Supply from continuing to purchase Hollister ostomy products. Hollister
systematically held shipments of large orders by retailers while it investigated
whether Bruce Medical Supply was the ultimate purchaser of the products.
Before releasing such an order, Hollister explained to the retailer that Bruce
Medical Supply was diverting products abroad in contravention of Hollister's
marketing policy and that retailers, therefore, should not continue selling to
Bruce Medical Supply. If the retailer refused to cooperate, it directly or
indirectly threatened to terminate the retail authorization agreement. (Citation
omitted.) As a result of Hollister's actions, only six retailers remain willing to
sell to Bruce Medical Supply."

23

A lot of water, however, had flowed over the dam between the March, 1980
termination, and March, 1981, of some of which the court failed to take note.
Bruce began purchasing from other dealers immediately upon termination.
Indeed, by a Najarian affidavit, the substance of which the court accepted as a
basis for granting the injunction, Bruce could not remain in business for a week
if it lacked Hollister products. It is inconceivable that defendant, both from
Bruce's continued advertising, and with even a rudimentary business awareness,
did not know that Bruce, who carried 10,000 customers, was acquiring
suppliers elsewhere. At the same time, Bruce's indirect purchasing relieved
defendant of any credit problems, and of dealing with Bruce's belligerent
president. To say, on this record, that a general boycott a year later was part and
parcel of an undertaking to prevent price discounting seems a very considerable
jump.5 Particularly is it so in light of undisputed evidence of a quite different
set of events occurring after the termination.

24

Pursuant to a contract, Abbott International for several years had had the sole
right to distribute Hollister products abroad. For several years Hollister had
sought to prevent domestic retailers from "diverting" goods overseas. This
required policing. As early as 1978 Hollister executives including one
Ploussard, had summoned the president of a Massachusetts retailer to Chicago
and requested that he cease exporting Hollister products. Policing was
facilitated by the fact that foreign ostomates, for reasons not altogether clear,
tend to use a much higher rate of closed, as distinguished from drainable,

pouches than do their American counterparts. Although the court made no

findings on the subject, affidavits and undisputed contemporaneous records
prove that employees of Hollister's International Marketing Division scanned
the product mix of unusually large retail orders and contacted retailers placing
suspect orders-generally orders for relatively large quantities of closed pouches.
Such orders were filled only upon the retailer's giving assurance that the goods
were to be sold domestically.
25

In July, 1980, in the course of such monitoring, Ploussard, head of the

International Marketing Division, called a Massachusetts retailer and inquired
whether a large, suspect order was for foreign sale. The retailer volunteered that
the order had been placed on Bruce's account. Ploussard told the retailer Bruce
was suspected of selling abroad, and, after conferring with defendant's
president, procured the retailer's agreement to drop that part of his order that
was for Bruce. Thus commenced, although, as the court found, there was no
substantial action until the following March, the so-called boycott.
Coincidentally, or not, plaintiffs' brief concedes that July was "about the time
that Bruce started to wholesale Hollister products to Germany."

26

Numerous exhibits of notes taken by Ploussard and his assistant Conley, also,
significantly, an executive of the International Marketing Division, show that
they called many other retailers during the summer of 1980 and afterwards, and
inquired about the destination of unusual orders. The court found that retailers
who informed them that the orders were for Bruce were told

27 Bruce Medical Supply was diverting products abroad in contravention of

"that
Hollister's Marketing policy and that retailers, therefore, should not continue selling
to Bruce Medical Supply. If the retailer refused to co-operate, Hollister directly or
indirectly threatened to terminate the retail authorization agreement."
28

The orders of those who could assure that products were not going abroad were
filled. For example, Ploussard's notes of a conversation with a New York
retailer in September, 1980 read "not for overseas-expanded territory earlier in
year-small hospitals, nursing homes-looks good-hope to double again-OKorder released." Another exhibit, introduced by plaintiffs, is a page of a March,
1981 Hollister computer printout of purchase orders. Next to a retailer's order
for an unusually large number of closed appliances-the sort preferred by
foreign ostomates-is the notation in Conley's handwriting, "Diversion to Bruce
and thence to Europe?" Conley's accompanying notes and his testimony,
corroborated by the retailer's affidavit, indicate that he called the retailer,
informed him of the problem of international diversion, and procured his
agreement to cease selling to Bruce. Yet another exhibit lists a retailer's

substantial orders for closed bags with Conley's notation "put on credit hold?
Yes. All orders match up to Bruce's International price list on bags except has
no 314X." In addition, the record includes an extensive newsletter sent by
defendant to its retailers in September, 1980, not mentioning Bruce, and setting
forth a firm policy against permitting international sales.
29

In sum, plaintiffs' claim that defendant's professed concern with international

diversion was merely a pretext to incommode Bruce generally is made out of
whole cloth. Rather, the record conclusively establishes that defendant's action
was due to a deep concern with foreign sales by domestic retailers;6 that it was
its policy not knowingly to fill orders which were going overseas; that it
strongly suspected Bruce of engaging in foreign sales; and that when it asked
retailers not to sell to Bruce this was its given reason.7 Furthermore, plaintiffs
freely admit they were in fact doing precisely what defendant was seeking to
stop.

30

We can agree with the court that the action which defendant took, with at times
unwilling cooperation of the dealers, to prevent Bruce from obtaining it goods,
was, technically, concerted activity within the definition of the Sherman Act.
E.g., United States v. Parke, Davis & Co., 1960, 362 U.S. 29, 80 S.Ct. 503, 4
L.Ed.2d 505. However, it was not shown to be for price discounting, but
because of Bruce's wrongful interference with Abbott's valid exclusive contract.
The court found policing to that extent to be reasonable. Plaintiffs have not
appealed the ruling that Hollister

31
"offered
legitimate non-price-fixing motives for controlling the distribution of
Hollister ostomy products abroad. Hollister has an obvious interest in protecting its
good will by controlling the distribution of its products in foreign markets in a
manner that allows the defendant to respond to language differences, variations of
medical practice, and differences in government regulations. Hollister's ability to
react effectively to such considerations not only affects its good will, but also its
potential exposure to product liability. Furthermore, in coordinating long-range
distribution and manufacturing strategies, Hollister has a legitimate interest in being
free to service customers from separate markets with products that are manufactured
in separate facilities. Hollister's ability to conduct business in accordance with these
many interests has the overall effect of promoting vigorous interbrand competition.
Since plaintiffs have not proved that Hollister dominates the foreign market, I am
unable to find that Hollister's conduct diminishes intrabrand competition without
producing significant benefits for interbrand competition."
32

We hold that from the court's unappealed ruling that defendant could
reasonably attempt to prevent plaintiffs from selling its goods overseas, it

follows that the post-termination "boycott," instituted to achieve that goal, was
a reasonable restraint of trade.8
33

Bruce contends, very possibly correctly, that by March, 1981, defendant was
undertaking to prevent its getting any Hollister products whatever, and asserts
this to be an overbroad response. There are two answers to this. One is that
Bruce does not suggest how defendant could safely protect itself by doing
anything less. While foreign ostomates generally prefer closed pouches, we find
nothing in the record to suggest that they use nothing else. It would appear that
virtually any box of Hollister products sent to Bruce could, potentially, wind up
overseas. Even if not, defendant was not required to adopt the least restrictive
means of stopping Bruce from selling abroad, but merely means reasonably
suited to that purpose. American Motor Inns, Inc. v. Holiday Inns, Inc., 3 Cir.,
1975, 521 F.2d 1230, 1248-50; see Continental T. V., Inc. v. GTE Sylvania,
Inc., 1977, 433 U.S. 36, 58 n.29, 97 S.Ct. 2549, 2561 n.29, 53 L.Ed.2d 568.
Defendant cannot be faulted for failing to engage in elaborate and possible
time-consuming speculation about Bruce's marketing intentions on an order-byorder or box-by-box basis. The court having held, quite properly, that defendant
was to be held to nothing stricter than a rule of reason, Continental T. V., Inc.
v. GTE Sylvania, Inc., ante; Eastern Scientific Co. v. Wild Heerbrugg
Instruments, Inc., 1 Cir., 1978, 572 F.2d 883, cert. denied, 439 U.S. 833, 99
S.Ct. 112, 58 L.Ed.2d 128, we see no basis for finding that it violated that
standard.

34

Secondly, or, rather, perhaps, primarily, there would seem a shorter answer.
Since it was Bruce's conceded selling abroad that brought on the boycott, and
defendant had the right to control foreign sales, all Bruce had to do was to agree
to stop its interfering, and adhere to the agreement, and then complain if
defendant continued the boycott. Poachers should be in a poor position to cry
foul.

35

Finding the court's conclusion as to likelihood of plaintiffs' success to be clearly

erroneous, we need go no further. We vacate the injunction, and remand for
further proceedings.

36

TORRUELLA, District Judge, dissenting.

37

With all due respect to the opinion of the majority, I dissent.

38

In determining whether a preliminary injunction should issue, the district court

must measure the evidence against the following standards, namely: (1)

Whether plaintiff will suffer irreparable injury if the injunction is not granted;
(2) Whether such injury outweighs any harm which granting injunctive relief
would inflict on the defendant; (3) Whether plaintiff exhibits a likelihood of
success on the merits; and (4) Whether the public interest will be adversely
affected by the granting of the injunction. Garcia v. Barcelo, 671 F.2d 1 (1st
Cir., 1982). The application of these criteria to the facts of a particular case is
within the sound discretion of the trial court. He who seeks to overturn such a
ruling has a "heavy burden." Engine Specialities, Inc. v. Bombardier Ltd., 454
F.2d 527, 530 (1st Cir. 1972). A decision to issue a preliminary injunction
should not be disturbed in the absence of a clear showing of abuse of discretion
or error of law. Grimard v. Carlston, 567 F.2d 1171, 1173 (1st Cir., 1978). The
fact that the appellate court might have reached a conclusion contrary to that of
the district court does not automatically warrant reversal unless such a
conclusion is brought about by applying the aforementioned standard.
Celebrity, Inc. v. Trina, Inc., 264 F.2d 956 (1st Cir. 1959). Stated differently,
mere disagreement with the conclusions of the district court is not sufficient for
a reversal unless the appellate court finds that the court below is clearly
erroneous. Aberdeen & Rockfish R. Co. v. Students Challenging Regulatory
Agency Procedures, 409 U.S. 1207, 93 S.Ct. 1, 34 L.Ed.2d 21 (1972). The
clearly erroneous standard is applicable even where, as here, findings are based
on documentary evidence or undisputed facts. Nemeroff v. Abelson, 620 F.2d
339 (2nd Cir. 1980); Custom Paper Products Co. v. Atlantic Paper Box Co.,
469 F.2d 178, 179 (1st Cir. 1972); Semmes Motors, Inc. v. Ford Motors
Company, 429 F.2d 1197, 1205 (2d Cir., 1970).
39

Although the majority opinion uses "clearly erroneous" language, it does not
appear to me that this standard has been applied but rather one bordering on de
novo review. See Developments in the Law-Injunctions, 78 Harv.L.Rev. 994,
1070-1073 (1965). It cannot be otherwise, as on the record of this case it is
difficult to say that one "is left with the definite and firm conviction that a
mistake has been committed." United States v. Gypsum Co., 333 U.S. 364, 395,
68 S.Ct. 525, 542, 92 L.Ed. 746 (1948).

40

Before reaching its conclusions, the court below reviewed voluminous

documentary evidence as well as various affidavits and depositions. Based upon
the totality of this evidence, the district court issued a comprehensive opinion in
which it found that plaintiff-appellees were dealers who were terminated by
defendant-appellants for price-related reasons at the request of its horizontal
competition. It found that as part of this conspiracy, a boycott was organized
and enforced by defendant-appellant. The court then concluded that plaintiffappellee's principal business would fail unless defendant-appellant was
enjoined from refusing to sell to plaintiff-appellee.

41

As I read the majority opinion, it does not question the existence of evidence on
the record supportive of those findings, but rather attacks its weight. This, of
course, is not the function of the appeals court in an interlocutory appeal under
28 U.S.C. 1292(a):

42

"This limited review is necessitated because the grant or denial of a preliminary

injunction is almost always based on an abbreviated set of facts, requiring a
delicate balancing of the probabilities of ultimate success at the final hearing
with the consequences of immediate irreparable injury which could possibly
flow from the denial of preliminary relief. Weighing these considerations is the
responsibility of the district judge; only a clear abuse of his discretion will
justify appellate reversal."

43

U.S. Steel Corp. v. Fraternal Ass'n. of Steelhaulers, 431 F.2d 1046, 1048 (3rd
Cir., 1970).

44

The majority's holding to the effect that plaintiff-appellants have failed to

demonstrate a substantial likelihood of success on the merits overlooks the fact
of business life that conspiracies to restrain trade are not usually brought to light
by direct evidence or frank admissions, nor does the law require that quality of
proof. Trabert & Hoeffer, Inc. v. Piaget Watch Corp., 633 F.2d 477 (7th Cir.,
1980). Such actions are not normally the result of express agreement nor within
the knowledge of non-participators. They are rather the machinations of those
who surreptitiously seek to avoid the detection of their deeds. Proof of such acts
is therefore mostly circumstantial in nature, requiring judicious application of
those inferences which arise from the conduct under scrutiny. Albrecht v.
Herald Co., 390 U.S. 145, 88 S.Ct. 869, 19 L.Ed.2d 998, reh. den. 390 U.S.
1018, 88 S.Ct. 1258, 20 L.Ed.2d 169 (1968); United States v. Parke, Davis &
Co., 362 U.S. 29, 47, 80 S.Ct. 503, 513, 4 L.Ed.2d 505 (1960). In reaching its
conclusions, the court below took such matters into account. The majority's
disconcertion with the conflicting evidence is understandable and tempts it to
consider "let(ting) the chips lie where they fall" (see slip opinion, page 3). This,
I believe, is what should be done. It is the duty of the trial court, and not the
appeals court, to sift through those conflicts and come up with the facts. Nor
should we blithely dismiss the affidavit of defendant-appellant's president,
Winn, with its false allegations (see footnote 4 of the majority opinion), in
which he gives patently pretextual reasons for the severing of Bruce's
dealership. It is precisely that type of conduct, among others, which allowed
the trial judge to conclude that the true reasons for Hollister's actions were
different from the stated ones. Cf. United States v. Smith, 680 F.2d 255, at 260
(1st Cir., 1982).

45

Although at this preliminary stage plaintiff-appellee's case is not exactly a

powerhouse, there is adequate evidence on the record to sustain the district
court's decision.

Of the District of Puerto Rico, sitting by designation

Elsewhere the court put it more simply. Some of the "justification (given) for
Hollister's conduct obscures the true price-fixing motives of Hollister's
conduct."

It is true that Abbott's letter contained gratuitous comments about the harm that
plaintiffs' discounting must do to defendant's domestic business, but if true, this
was not news to defendant, nor of Abbott's concern

At the same time, we note that in rejecting it the court failed to weigh it in the
light of defendant's conduct for the year following termination, when credit
problems were eliminated but defendant did not interfere with Bruce's access to
its products except when directly traced to foreign sales. See post

We cannot forbear commenting upon a matter, noted by the court, that after suit
was brought, defendant's president, Winn, furnished an affidavit giving further
reasons, alleging every sort of poor performance by Bruce in the conduct of its
dealership. The court, warrantably, found these charges to be false. We do not
see how it could have found otherwise. If half of these charges had been true,
Bruce should have been out of business by itself, long before defendant's
termination, or if still functioning, defendant clearly would have advanced these
reasons at the time. Perhaps, in justice, defendant should lose the case because
it devised false reasons for the injunction hearing, but an antitrust case cannot
be so created

Plaintiffs' brief, recognizing this problem, says it was "put ... to rest" by Mayer's
affidavit that "within a week or so after the January 28, 1980 Chicago
conferences, I learned that a system was set up to prevent Najarian from buying
Hollister products from other dealers...." Mayer was an employee who said he
had been discharged "without explanation." The affidavit was rank hearsay, and
was supported by nothing. Understandably, it was not adopted by the court. We
would add that the system was singularly delayed, if this was its purpose,
especially in the case of a supplier who could "frighteningly intimidate" its
dealers

We dismiss as clearly erroneous the court's finding that defendant "organized

the boycott at the urging of Bruce Medical Supply's horizontal competitors," as

there was, literally, no evidence to support it. The only support the court gave
for this finding was a letter from an Indiana drug store, complaining that Bruce
was its main competitor. The letter was not written until April 27, 1981, long
after the "boycott" had commenced-indeed, after plaintiffs had brought suit to
restrain it
7

It is true that in an affidavit dated May 27, 1981, defendant's president Winn
stated that he took action to interfere with Bruce's purchases "in order to give
effect to Hollister's termination of Bruce Drug and in order to avoid the
potential problems created by Bruce Supply's international diversion."
However, even apart from the inadequate showing that the termination was for
an unlawful reason, it is clear, as a matter of timing, that it was Bruce's
international selling that was defendant's activating motivation. Cf. NLRB v.
Eastern Smelting & Refining Corp., 598 F.2d, ante, at 671. Indeed, as
previously pointed out, it was not until partial efforts did not stop Bruce's
international trading that defendant attempted a general shutoff

Nothing we say herein is meant to foreclose plaintiffs from attacking the

exclusive contract as an unreasonable restraint of trade at the full hearing on the
merits. As the court held, however, they have shown no likelihood of
succeeding in doing so